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The competition authority in Poland has authorized 3.7 GW of
offshore wind capacity following the roll out of subsidies for its
attractive emerging offshore wind market.
The authority approved the three projects for
two joint ventures involving international developers and companies
part-owned by the Polish Treasury on 12 March.
The joint venture of Danish offshore wind developer Ørsted and
state-backed Polish utility Polska Grupa Energetyczna (PGE) won
approval to develop a pair of wind farms with a total capacity of
2.5 GW. PGE and its subsidiaries already operate 17 onshore wind
farms in Poland in addition to hydropower, solar PV, gas-fired and
coal-fired power.
PGE Group exemplifies the country's energy transition as an
operator of coal power plants aspiring to decarbonize. PGE Group's
current generation fleet is comprised of over 80% hard coal and
lignite, and the group sources 60% of the fuel from its own lignite
mines, the group said in its transition plan. It is also the
third-biggest carbon dioxide polluter in the EU, according to the
campaign group Europe Beyond Coal.
PGE Group has announced plans to separate its coal assets from
its other activities as well as a program to spend zł75 billion
(US$19 billion) to become climate neutral and supply 100% renewable
energy by 2050. PGE also plans to increase the proportion of
renewables in its mix from 9% to 25% in 2030. To do this, the
company envisions acquiring offshore and onshore wind farms and PV
assets, while converting its coal district heating network units to
run on low-carbon gas.
The government's offshore wind approval also marks the entry of
the global developer Ørsted into Poland's offshore wind market.
"Poland, like many countries around the North and Baltic seas, has
the benefit of good wind conditions and relatively shallow waters.
The fundamentals are good for offshore wind and with the strong
public support for the technology, Poland is a very interesting
market for us," Ørsted's Head of Group Press Relations, Offshore
Wind, Tom Christiansen told IHS Markit.
The government approved a separate 1.2-GW offshore wind farm to
be developed by state-backed Polish oil refiner PKN Orlen and a
Netherlands-based affiliate of Canadian renewable generator
Northland Power, NP Baltic Windpower.
The first subsidies for offshore wind in Poland have been
eagerly anticipated by the market. "This is really great news for
the offshore wind energy sector in Poland. According to our
outlook, the sector will exceed 16 GW of installed capacity by
2050," said IHS Markit Principal Research Analyst Andrei Utkin.
All three winning projects are expected to secure 25-year
Contracts for Difference (CfD) offtake agreements, the developers
said. The timespan covered by the subsidy is longer than those seen
in other European markets as well as being less risky for
developers, said Utkin.
The first 5.9 GW of offshore wind CfDs are set to be awarded
through a non-competitive arrangement with the country's energy
regulator by 30 June, and CfD auction rounds will take place in
2025 and 2027, with 2.5 GW to be awarded in each round.
Poland's renewable targets
The national government approved its revised Polish Energy
Policy through 2040 in February, targeting a move into renewables
and away from coal-fired power. The plan will see the country
reducing coal's share of electricity production to 37%-56% by 2030
from 75%. Poland also has proposed investing zł150 billion ($39
billion) in nuclear energy.
The government has also set an objective of reaching 32%
renewables in its energy mix by 2030, but it will not be easy to
transition from coal-fired power. Poland has subsidized coal-fired
power generation through Capacity Market auctions since 2018. It
last year announced the exclusion of coal from auction payments
starting in 2025.
However, Poland's power sector is currently burdened by
financial woes. Its utilities must pay for EU emissions allowances
to run coal-fired plants alongside a legislated duty to keep retail
prices low.
"This situation has sparked ongoing disagreements between the
government, the power sector, and the coal mining unions over
policy," wrote IHS Markit Senior Analyst Zoe Grainge in a recent profile of the country's
renewables market.
EU pressure
Despite Poland's recent targets, it was the only EU member state
not to commit to climate neutrality by 2050 when the bloc set the
target in 2019.
But in recent months the country has regulated its way onto an
energy transition path. The government passed the Offshore Wind Act in
February, setting out a plan to meet a 2050 goal for 28 GW of
offshore wind.
The European Commission is aiming to make the EU the first
climate-neutral region by 2050 in part through a massive scale-up
in offshore wind projects. It has planned for a 25-fold increase by
2050 to reach approximately 300 GW, according to a communication on
offshore wind published in November.
Posted 18 March 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability
